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Kerry Pledges To Introduce Retrans Reform Legislation

Senate Communications Subcommittee Chairman John Kerry (D-Mass.) said Saturday he will introduce legislation that would keep TV station signals on the cable system--they remain on the air--during retrans impasses that extend beyond contract deadlines, and would make the FCC a referee, though one without the power to throw a flag.

That means that the FCC would mediate and make a recommendation, but could not force an outcome. But during that FCC evaluation process, the signals would stay on the air regardless of whether a contract had expired.

Kerry was not pointing fingers at either Fox or Cablevision--Fox stations went dark on Cablevision systems at Midnight Oct. 15 after a deal could not be reached--but said it was time for the government to step in.

"Everyone who follows this market is disappointed but not surprised that FOX and Cablevision were unable to reach a deal," said Kerry in a statement. "Both believe they are making a fair offer and both are trying to represent the best interest of their investors. Of course, the third party left unrepresented at these negotiations is the consumer and many will be surprise today to find that they have lost their fox programming."

He conceded that most retrans negotiations do not end with viewers losing signals, but said when it does happen, it "disrupts" their lives. He said retrans has become a high-stakes game of chicken that leaves the government decrying the consumer impact but trying not to take sides. " That's a tricky and unproductive proposition and it's not sustainable."

One of the changes in the retrans system of late is broadcasters' increased efforts to get cash, or more cash, for their signals given their importance to cable and the need for those broadcasters to get additional revenues streams.

"I will be introducing legislation that would stave off the termination of carriage of signals upon the expiration of an agreement and allow signals to continue transmitting until the FCC evaluates the last best offer of the firms, determines whether they were made consistent with good faith negotiation and market conditions, and if they were, then recommends or does not recommend binding arbitration during which carriage would continue," said Kerry.

"If one party or the other rejects the recommendation, as they have in this instance, then a neutral notice would be issued to consumers that the signal will be coming down and both parties would have to publicly disclose the parameters of their last best offer to each other in order for consumers to determine for themselves which party they side with. This is the best way to empower consumers, increase transparency, and preserve the free market."

Kerry invoked the same game of chicken analogy in March during the Disney/Cablevision retrans fight, telling FCC Chairman Julius Genachowski in a letter that "the retransmission consent regime has become outdated in the 18 years since it was crafted." In that letter, Kerry put the blame on broadcasters, saying "a broadcaster can pull its signal from cable companies serving millions of people if it does not get paid what it wants for that signal." He said he didn't think the broadcaster should be able to do that so long as the cable operator was negotiating in good faith.

And back in December, when Fox and Time Warner were at loggerheads, Kerry said that if Fox did not keep the signals on the air, he wanted the FCC to step in an mandate it. 

This time around, Kerry was not picking sides.

The American Cable Association, joined the call for changes to the retrans system.

"The retransmission consent law has become a federal license for broadcasters to threaten TV station blackouts, actually pull TV station signals and engage in flagrant acts of price discrimination against rural cable customers," said American Cable Association President Matt Polka. "This outdated law, passed when Facebook's famous co-founder was just 8-years-old, is a club used by avaricious media giants to pound pay-TV providers into submission."